The Wikipedia entry for Crowdsourcing defines the phenomena as "the act of taking tasks traditionally performed by an employee or contractor, and outsourcing them to a group of people or community, through an "open call" to a large group of people (a crowd) asking for contributions."

Here are some articles and videos that help explain the concept:

Wired Magazine, The Rise of Crowdsourcing. June 2006

BNet, What is Crowdsourcing? 2007